Condo Association Management Blog

Can condo association board give a vendor a five year contract?

Our board of directors is made up of seven people. Only two people have one more year remaining and the five other positions are open for election next month. The board just gave a $15K raise and a five year contract to the bookkeeper in case the new board decides to terminate her. Is this legal or does it indicate a breech of their fiduciary responsibility to the community.

How do you know that the board gave the raise and contract? And how do you know that it was "in case the new board decides to terminate her"? And why do you think they would want to give her the raise and contract? And it seems really strange that 5 of 7 board positions are open for election at the same time. Is that what the bylaws say?

This was a rumor until we had our community budget meeting and I asked the President of the Board and he admitted it. Three positions term of 3years have expired and the two others are appointed after resignations. Therefore five positions are open for election/3 for 3year terms and 2 for 2year terms. This is as per our bylaws.

Marty

Well “R” since they know – what difference does it make is how they know. And “R” don’t you think it was done because the two board members would no longer be able to cover up any misdeeds – so they are paying the bookkeeper to do it for them. Make sense?????

Another Voice

A believeable scenario, but you really have to give us a source (ie an opposing board member, the bookkeeper, etc).

$15,000 raise?? What was the previous salary, is the person a CPA who also does your taxes for the year,was she underpaid to begin with?

A five year contract is not normal. The longest we sign a contract for is 2 years and that's because the price doesn't go up the next year when we do.

More info please.

Verda

Someting smells. First off, unless you are a 1000 unit Condo, your bookkeeping can be done, including payroll, for under 20 hours a week [$20,000/year].

Except for possibly gas, electric and oil it is wrong to usurp a future board's authority.

Some overwhelming advantage is needed to go beyond a member's term of office [in your case 2 yers].

Bill

I think all of our contracts are for 1 year with renewable clause. Just about all of our contracts have a clause that says that either party can terminate after providing the other party with a specified notice period. I would not like to see our board give a 5 year contract to anyone.

Mark

I somewhat agree with Verda, I'm treasurer of my 12 unit condo and if I spend more than 2 hours a month on our books then something is wrong. Maybe this person is more property manager than bookkeeper?

Ron

Our Board terms are three years. We just signed a 5 year contract with our elevator contractor which gave us a 7% discount from what the annual price would be. So signing a contract for a term longer than the term of a Board is not necessarily a bad thing if something was gained in return.

However, in the case presented here I have to agree with the general consensus that a $15k raise over a previously established salary for a bookkeeper is irresponsible.

Doing the math, assume the raise was a generous 10%. That would make the bookkeeper's previous salary $150,000 a year. A rational raise would be around 5% making the previous salary around $300,000. There is something just wrong for a bookkeeper to be making that kind of money in a HOA environment.

Frank - MA

I'm treasurer of a thirty unit condo. we have two major contracts (now removal and Landscaping approx $55K written as one year with options to extend. Usually deposits of fees are three time monthly. Writing ten checks a month would be an outside number. An unwritten part of the job is to keep an eye on any contractors we employ. Not part of the job but something I enjoy doing is writing and printing a four page newsletter monthly. A 10% raise on top of what I'm getting now would still be ZERO.

mary

Awarding a 5 year contract to a vendor may be OK if the gov, docs are silent on contract terms. Some docs state contracts cnnot be for longer than year. However, I must agree with others who have answered this msg that an increase of $15,000 seems a bit high. Perhaps the increase is really spread over the 5-yr period??? All contracts usually have a termination clause so if the new board does not want this person to continue to work for the assn the contract can be terminated before the 5 yr period is up,

Patricia Wood

Wow... "R" let me know if you have any more openings. I need a job like that one.

JT

Since this is a question about the Treasurer position, and since something improper may be going on, then you should be very strong in exercising your rights to inspect the financial records and books.

Donald Holdorf

To make sure everything is on the up & up, we have an audit every year.. Anyone can make a mistake, this way the board is covered, and are open to the owners at their request. It does cost a bit, but it could cost a whole lot more if something goes array!!

Regarding my post about a 5 year contract and a $15k increase; she is our bookkeeper/one of 3 full-time office staff in our 700 unit HOA and her previous salary was $45K. She does not prepare our taxes, she does not prepare our 6 person payroll and we pay $7,500/yr for monthly maintenance checks to be mailed to a "lockbox" service.

Yes, if they lock it at a reasonable price that normaly would go up every year. We have that on bulk TV and Internet, saves a unit owner about $100 per month.

Susan

"Regarding my post about a 5 year contract and a $15k increase; she is our bookkeeper/one of 3 full-time office staff in our 700 unit HOA and her previous salary was $45K. She does not prepare our taxes, she does not prepare our 6 person payroll and we pay $7,500/yr for monthly maintenance checks to be mailed to a "lockbox" service."

A bookkeeper making that kind of money and the board outsources payroll ? something is wrong. What state are you in? how much is your monthly assessment ? It appears bookkeeper is an employee of the association along with 2 other people. What do you mean by "contract" ? Payroll employees can be let go with or without cause. That is why state unemployment benefits exist. $7,500/yr. to a bank to process monthly checks ? Sounds excessive.

Switch to quarterly billing and/or automatic debit (auto pay) to unit owner checking account. Are you not running for a seat on your board ?

Susan, I am on Long Island, New York and our monthly assessment is now $240. The bookkeeper was given a 5 year employment contract to keep her here in case a new board wanted to replace her and so that she would not accept another job elsewhere. I had been elected to the board last September and resigned May 23. The Board called a special meeting with our attorney and told me that they could vote me off. Our bylaws and the New York State law does not permit that so rather than take them to court I chose to resign, reluctantly and regretably. This board thinks that they are all powerful and has 5 members on their team; the paid community manager, the 3 office staff, the 2 maintenance staff, and the attorney all protecting each others back and covering up for each other.

susan

Big mistake. I am not familiar with NY Condo Law but as far as I know in most associations across the country an ELECTED director can only be removed from the board by the vote of the membership through what is called a RECALL.

linda

I'd like to work for your condo association! Sounds a little like crony-capitalism. Maybe the accountant is friends with someone on the Board. If you have enough homeowners for a recall, do it. If you don't, it's probably because the other homeowners don't care enough to make the Board accountable.